ASSIGNMENT 6

PROPERTY LAW

DOCTRINE OF LES PENDENS

&
FRAUDALENT TRANSFER

NAME Ankit Tiwari

COURSE BBA LLB

ROLL NO. - 130958011

 DOCTRINE OF LIS PENDENS

Lis pendens refers to a pending legal action or a formal notice of a legal action. The doctrine
of Lis Pendens has been inscribed in the Indian Legislative regime by way of Section 52 of
The Transfer of Property Act, 1882. The section states that
Transfer of property pending suit relating thereto. During the pendency in any Court
having authority within the limits of India excluding the State of Jammu and Kashmir or
established beyond such limits by the Central Government of any suit or proceedings which
is not collusive and in which any right to immoveable property is directly and specifically in
question, the property cannot be transferred or otherwise dealt with by any party to the suit or
proceeding so as to affect the rights of any other party thereto under any decree or order
which may be made therein, except under the authority of the Court and on such terms as it
may impose.
Explanation For the purposes of this section, the pendency of a suit or proceeding shall be
deemed to commence from the date of the presentation of the plaint or the institution of the
proceeding in a Court of competent jurisdiction, and to continue until the suit or proceeding
has been disposed of by a final decree or order and complete satisfaction or discharge of such
decree or order has been obtained, or has become unobtainable by reason of the expiration of
any period of limitation prescribed for the execution thereof by any law for the time being in
force
The major idea lying behind Section 52 is that in a suit, which is still pending in terms of its
determination, the status quo should be maintained and therefore it should remain unaffected
by the act of any of the parties to the suit. It makes it expressly clear that in a case where the
dispute between any of the parties is with regard to the right of any immovable property, such
property cannot be transferred by any of the parties to the suit which as a result may affect the
rights of the other party involved in the dispute. This principle does not get eliminated after
the dismissal of the suit. After the dismissal of the suit and before filling of the appeal, the
lis continues to exist and hence the defendant can be prevented from transferring the
property to the prejudice of the plaintiff. The explanation to the said section makes it clear
that the lis shall be deemed to have commenced from the date when the plaint shall be
presented in the court and shall continue to exist till the time such suit or proceeding has been
decided and a final order or decree has been obtained accompanied with complete satisfaction
or discharge of such degree or order.
IN ORDER TO CONSTITUTE LIS PENDENS THE FOLLOWING
CONDITIONS MUST BE SATISFIED:-

1) There should be a pending suit or proceeding;

2) The suit or proceeding must not be collusive one;
3) The suit or proceeding must be pending in a Court of competent Jurisdiction;
4) The suit or proceeding must be one in which a right to immovable property is directly and
specifically in question;
5) The property directly and specifically in question must be transferred during such
pendency;
6) The transfer by any party to the suit must affect the right of other parties till the time the
case is finally disposed of.
Confirming to this principle, The Supreme Court in the case of Jayaram Mudaliar vs.
Ayyaswami has held that the objective of this section is not to deprive the parties of any just
or equitable claim but to ensure that the parties subject themselves to the jurisdiction and
authority of the court which shall decide the claims that are put before it. In another case of
Hardev Singh v. Gurmail Singh, it was held that the Section 52 does not render any transfer
of a disputed property void or illegal, but instead brings the purchaser within the binding limit
of the judgement that shall be pronounced on the disposal of dispute. In any case where a
transfer is made during the pendency of the suit, if the suit is disposed off in favour of the
transferor then the transferee rights shall prevail whereas on the other hand if the rights of the
transferor are recognised only to a certain extent or part of the property then the transferees
right shall also extend up to the limit till which the right of transferor exists.
The preliminary assumption behind the doctrine of lis pendes is that if the parties to a dispute
are not prohibited from transferring any of the property then successive alienations shall take
place. In such a situation it would become impossible that the action or suit be successfully
terminated. With this as a consequence, the court would be unable to dispense its function of
protecting the suitors from future injuries. The principle imbibed in this section finds its
genesis in the Common Law maxim of ut lite pendent nihil innovator i.e. during the pendency
of litigation; no new rights shall be introduced. As a rule of justice equity and good
conscience, this principle gets applied even in those laws where the Act is not applied.
NON APPLICABILITY OF THE LIS PENDENS DOCTRINE

Lis pendens does not necessarily get applied in every case. Following are Certain instances
where this doctrine does not get applied:
A sale made by the mortgagee in the exercise of the power as conferred by the mortgage
deed. The principle of lis pendens shall not be applied in this case and therefore the sale
remains valid, though made during the pendency of a suit filed by the mortgagor.
In matters of review;
In cases where the transferor is the only party affected;
In cases of friendly suits;
In cases where the proceedings are collusive;
In cases of execution proceedings where the order is passed against the intervener. In such
matters, an appropriate remedy shall be a suit filed under order 2, rule 63 of the Code of Civil
Procedure, 1908;
In case of suits involving pending transfers by a person who is not a party to the suit;
In cases where the property has not been properly described in the plaint;
In cases where the subject matter of rights concerned in the suit and that which are alienated
by transfer are different.

The language used in this section in no way prohibits any of the parties from making a
transfer of the property. The only indication that it makes in lieu of such transfers is that the
new purchasing party shall also be subject to the final order that shall be pronounced by the
court of competent jurisdiction. The transferee shall be only entitled to the title so transferred.
The doctrine of lis pendens is applied to a case to prevent the right of a third party and not for
the person or party to the suit making such transfer. This statutory right is made for the third
party in order to set aside the alienation with the ultimate aim of protection of his own rights.
However, there is one exception that lies to this rule if Lie Pendens i.e. the Court if it deems
fit can permit any of the parties to the suit to transfer the property on such terms that are fit
and proper to impose.

RECOMMENDATIONS BY THE LAW COMMISSION IN ITS 157TH

REPORT
The Law Commission has recommended that there are certain changes that should be brought
in the section so as to protect the interest of the person making the purchase. There is a lot of
anxiety, loss and hardship faced by such people in lack of adequate means of knowing that
whether a suit or proceeding is lying in lieu of that property or not. If the state of affairs is
known to the purchaser after the deal is settled, it comes to him as a big shock. All these
inconveniences, risk and misery, should be reduced. Some satisfactory and reliable recourse
should be enacted so that all the details regarding pendency of a suit can be made known to
every prospective purchaser for example title verification and due deligent procedures etc.
 FRAUDALENT TRANSFER
The principle of section 53 is based on the rule of justice, equity and good conscience. The
section enumerates fraudulent transfer. A transfer made with intention to defeat any right of
the transferee or of any other person interested therein is called fraudulent transfer of
property. Such transfer is not void but voidable at the option of person named.

Relevant Provisions

(i) Section 53 Transfer of Property Act 1882.

(ii) Cross reference Section 17 of Contract Act

Meaning of Fraud

A false representation of a matter of fact, whether by words or by conduct, by false or

misleading allegations, or by concealment of that which shall have been disclosed, which
deceives and is intended to deceive another so that he shall act upon it to his legal injury.

Meaning of Transfer

Transfer means an act of the parties, or of law, by which the title to property is conveyed from
one person to another.

Meaning of Fraudulent Transfer

A transfer of property the object of which is to defraud a creditor or hinder or delay him or to
put such property beyond his reach is called Fraudulent Transfer.

Fraudulent Transfer of Property

Under Transfer of Property act, following points are important to explain of fraudulent
transfer of property.

(i) Voidable at option of Defeated or Delayed Creditor

Every transfer of immovable property, which is made with intent to defeat or delay creditors
of transferor, is voidable at option of any creditor, who is so defeated or delayed. For
example, Bashir is indebted to Ahmad, and he attempts to sell his house, and is intentions to
convert his house into cash to defeat Ahmad. And if Rasheed is aware of Bashirs indebtness,
but he purchases Bashirs house, then such transfer is voidable at option of Ahmad.
(ii) Rights of Transfer In Good faith and for consideration

Transfer of immovable property, which is made with intent to defeat or delay creditors of
transferor, does not affect rights of transferee in good faith and for consideration. For
example, Bashir is indebted to Ahmad, and he attempts to sell his house, and his intention is
to convert his house into cash to defeat Ahmad. And if Rasheed is not aware of Bashirs
indebtness, but he purchases Bashirs house against a consideration of ten lakh rupees, then
such transfer does not affect rights of Rasheed.

(iii) Law Relating to Insolvency

Transfer of immoveable property, which is made with intent to defeat or delay creditors of
transferor, does not affect any law, which is in relation to insolvency and which is in force.

(iv) Institution of Suit

If a creditor institutes suit to avoid a transfer on this ground that it has been made with
intends to defeat or delay the creditors of transferor, it is considered that such suit is instituted
on behalf of all creditors or for benefit of all creditors.

(v) Voidable at Option of Subsequent Transferee

Every transfer of immoveable property, which is made without consideration and which made
with intent to defraud a subsequent transferee, is voidable at option of such transferee.